U.S. Patent and Trademark Office Rule Changes Relating to Continuation Applications, Requests for Continued Examination and Need for Examination Support Documents for Applications having more than 25 Claims

In the summer of 2007, the US Patent and Trademark Office (USPTO) issued rules to restrict the number of continuations and requests for continuing examination (RCEs) permitted in a family of patent applications deriving from the same original application and limit the number of claims permitted in any application without submission of an examination support document.

Just before the rules were due to go into effect implementation of them was enjoined by the District Court for the Eastern District of Virginia on the basis that the rules went beyond the rule-making power Congress had invested on the USPTO. The USPTO appealed that decision.

On March 20, 2009, the Court of Appeals for the Federal Circuit issued its decision on the USPTO’s appeal.

The appellate court first affirmed the district court’s holding that the USPTO lacked authority to effect substantive, as opposed to procedural rules. However, the majority (Prost and Bryson JJ) held the USPTO’s rules to be procedural rather than substantive in nature.

The court then turned to the question of compatibility of the rules with the US Patents Act. Because the rules were procedural, following the United States Supreme Court decision in Chevron USA Inc v. Natural Resources Defense Council 467 U.S. 837 (1984), the court was required to give deference to the USPTO’s interpretation of the Patents Act’s provisions relating to proceedings in the USPTO.

Even with such deference, the Federal Circuit found that Rule 78 restricting the number of continuation applcations that could be filed contravened 35 USC 120 which, as a result of its use of the words “shall have the same effect as to such invention as though filed on the date of the prior application” set out the exclusive requirements for continuation applications. The court noted that some alternative version of the rule might be acceptable if aimed at preventing prosecution history laches or confined to limiting the number of serial continuations that may be filed.

Regarding Rule 114 restricting the number of RCEs that can be filed, the Federal Circuit disagreed with the district court that such a limitation was in conflict with 35 USC 132. Since 35 USC 132 required the Director to prescribe regulations to provide for the continued examination and did not unambiguously preclude the USPTO’s interpretation of it as permitting the regulations to apply to a family of applications rather than to any specific application, deference should be given to that interpretation. Hence the rule was permissible.

On Rules 75 and 265 relating to the need for examination support documents if more than 25 claims or 5 independent claims are present in the application, the court found that these should not be construed as placing an actual limit on claim numbers and so were not ultra vires.

The majority remanded the case to the district court for further determinations on 1) whether the rules are arbitrary and capricious; 2) whether there were other points of inconsistency with the Patents Act not discussed; 3) whether all USPTO rule-making is subject to notice and comment; 4) whether the rules are impermissibly vague; and 5) whether the rules are impermissibly retroactive.

Rader J dissented and would have upheld the district court decision on the ground that the rules were impermissible substantive rule-making.

It is possible that the appellees may seek reconsideration of the decision in the Federal Circuit or even review by the Supreme Court. If they do not, the case will return to the district court for consideration of the issues noted above.

Ed. Note: The USPTO subsequently reconsidered the appropriateness of these rules and rescinded them. See our subsequent report entitled: USPTO Rescinds Controversial Patent Regulations and Seeks Dismissal of Tafas v. Kappos.